Investors may want to jump into oversold oil stocks now.
All as tension in the Middle East, and with Russia-Ukraine continues to boil.
Israel, for example, wants to intensify its pressure to force Hamas to negotiate or return hostages. It’s also being reported that Israel could hit Iran again. Russia continues to strike Ukraine. NATO scrambled jets after Russia bombarded Ukraine. Germany may soon provide Ukraine with long-range missiles.
In addition, according to the Russian news agency, TASS.com, “Russia treats the idea of the ‘coalition of the willing’ to create a multinational force as a plan of military intervention and will regard its units in Ukraine as legitimate targets, Russian Foreign Ministry Spokeswoman Maria Zakharova said.”
All of which could easily send oil prices and oversold oil names even higher.
Look at Exxon Mobil
With a yield of 3.6%, oversold shares of Exxon Mobil (NYSE: XOM | XOM Price Prediction) are just starting to turn higher again. From its last traded price of $110.46, we’d like to see it retest $116 near term.
Fueling the upside, analysts at Scotiabank have just raised their price target on the XOM stock by $10 to $125 per share, with a sector perform rating. We also have to consider that XOM has a strong balance sheet, which will continue to support the business and its healthy yield.
While the company has said lower oil and gas prices could reduce its second-quarter earnings by about $1.5 billion from the previous quarter, it’s fair to say it’s priced into the stock.
Plus, its dividend is still healthy, with the company last paying out a dividend of 99 cents on June 10 to shareholders of record as of May 15. Its next dividend should be out by October.
Occidental Petroleum
With a yield of 2.15%, Occidental Petroleum (NYSE: OXY) is also just starting to pivot higher. Last trading at $44.63, we’d like to see it break above prior resistance at around $46. If it can, it could retest $48 a share shortly after.
Piper Sander just raised its price target on OXY to $50 from $48. Bank of America reiterated its hold rating on the stock with a price target of $44 a share.
Recent earnings were mixed, with EPS of 87 cents beating estimates by 11 cents. Revenue of $6.8 billion, up 13.7% year over year, did miss by $110 million. Moving forward, the company does expect to cut its costs by up to $350 million. That includes a $200 million reduction in its 2025 capex guidance and operational cost savings of about $150 million.
Also, despite challenges, the company remains confident in maintaining production growth and advancing long-term shareholder value.
EOG Resources
With a yield of 3.43%, EOG Resources (NYSE: EOG) is also starting to pivot higher. Last trading at $119.05, we’d like to see EOG retest $125 a share initially. Helping, analysts at Raymond James just raised their price target on EOG to $161 from $158 with a strong buy rating on the stock.
Scotiabank also upgraded EOG to Sector Outperform from Sector Perform with a $130 price target, citing reasonable valuation compared to other mega-cap E&Ps, even as the company remains one of the industry’s leading operators, particularly in its core Permian region, as noted by Seeking Alpha.
“We believe the market will be willing to pay a fair premium for companies with a fortress balance sheet in today’s volatile and uncertain market, and EOG currently offers the strongest balance sheet within our coverage with a net debt to capital ratio of less than 2% at year-end 2024,” added the firm.
The company also just raised its quarterly dividend of $1.02 per share, which is payable on October 31 to shareholders of record as of October 17.
Or, if you’d rather invest in a strong, yielding exchange-traded fund (ETF), you may want to consider rebounding shares of the XOMO ETF.
YieldMax XOM Options Income Strategy ETF
With an expense ratio of 0.99% and a distribution rate of about 38%, the YieldMax XOM Option Income Strategy ETF (NYSEARCA: XOMO). Its dividends are paid monthly, with its latest one for $0.3649 paid out on July 11. Before that, it paid a dividend of $0.2498 on June 13.
While XOMO doesn’t directly invest in Exxon Mobil, it does generate monthly income by selling/writing call options on XOM.
Helping, shares of XOM are just starting to pivot higher again, with oil gushing higher on Middle East concerns. Plus, analysts at Scotiabank just raised their price target on the XOM stock by $10 to $125 a share, with a sector perform rating. We also have to consider that XOM has a strong balance sheet, which will continue to support the business and its healthy yield of 3.6%.
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